GST bill causes confusion over tax holidays for FMCG and auto sectors

Several companies from the fast moving consumer goods (FMCG) and auto sectors are knocking at the state and central governments’ door to have a clear knowledge on whether they could monitor the tax incentives offered by state governments, since the recently passed goods and services tax (GST) bill has little to offer as far as the ongoing tax holidays for investing in underdeveloped areas is concerned.

"This is not just a tax issue; it is a sensitive political issue. While many companies that had invested in these areas due to lower taxation will see rising costs, state governments may not be able to abide by the MOUs they had signed with these companies," a person close to the development told ET.

Several such companies are yet to reach a stage when they are no longer eligible for tax exemptions.

When GST is implemented, the government would not be able to continue the current tax exemptions, which could cause friction between the companies and the government. As per reports, some state governments have approached the centre about the issue.

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